Octel Corp. Reports Third Quarter 1999 Results.NEWARK Newark, cities, United States Newark. 1 City (1990 pop. 37,861), Alameda co., W Calif., on the east side of San Francisco Bay; inc. 1955. , Del.--(BUSINESS WIRE)--October 28, 1999-- Octel Corp. (NYSE NYSE See: New York Stock Exchange : OTL OTL Office of Technology Licensing OTL Out To Lunch OTL Overtime Loss (hockey) OTL Over The Line (tournament in San Diego, CA, USA) OTL Output Transformer-Less (audio systems) ) today announced financial results for the third quarter ended September September: see month. 30, 1999. - Highlights - -- Specialty Chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. continues to improve operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . -- Tetraethyl lead tetraethyl lead (tĕt'rəĕth`əl), (C2H5)4Pb, viscous, colorless, poisonous liquid. It is an organometallic compound prepared by reacting ethyl chloride with a sodium-lead alloy. (TEL TEL Telephone TEL Telegram TEL Telugu (langauge) TEL Terrorist Exclusion List TEL Technology-Enhanced Learning TEL Transporter-Erector-Launcher TEL Tetra-Ethyl Lead TEL Team Deutsche Telekom ) gross profit maintained at 40% on sales. -- Share buy back program for 1999 begun. -- Acquisition of Alcor Group expected to be completed in Q4. -- Decline of TEL steeper steep 1 adj. steep·er, steep·est 1. Having a sharp inclination; precipitous. 2. At a rapid or precipitous rate: a steep rise in salaries. 3. a. than previously forecast. Total revenues for the third quarter of fiscal 1999 were $126.9 million with an operating income of $26.1 million and a net income of $12.2 million. Earnings per share were $0.88. Third quarter earnings included an exchange translation loss of $2.9 million due to the strength of sterling and a further refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies of Italian withholding tax The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. of $3.2 million. The net effect of these items on earnings per share was an increase of 12 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . Total revenues for the nine months ended September 30, 1999 were $384.7 million with an operating income of $75.7 million and a net income of $34.4 million. Earnings per share were $2.48. The Specialty Chemicals business had an excellent third quarter with sales of $29 million and an operating income of $2.8 million after a full recovery of corporate overheads. Sales for the nine months at $87 million were 47% higher than last year due to organic growth and the inclusion of Octel Deutschland and the Octel Starreon joint venture in 1999 sales revenues. TEL sales for the nine months were $298 million, an increase of $5 million over the same period in 1998. The inclusion of sales to former customers of Ethyl Corporation Ethyl Corporation is a fuel additive company headquartered in Richmond, Virginia. The company is a manufacturer, blender and distributor of fuel additives. Among other products, Ethyl Corporation distributes tetraethyl lead (referred to as TEL to avoid the stigma associated with (Ethyl ethyl (ĕth`əl), CH3CH2, organic free radical or alkyl group derived from ethane by removing one hydrogen atom. ), effective October October: see month. 1, 1998, has resulted in an increase in sales revenue over the nine months to September 30, 1998. TEL volumes continue to decline in line with decreased global demand. Average retail selling prices for the nine months to September 30, 1999 increased by 3 percent over the year to December December: see month. 1998. Net cash provided by operating activities in the third quarter was an encouraging $32 million, in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a high tax payment of $25 million. This will result in a $9 million surplus cash generation as defined under the company's banking covenants, releasing $4.5 million for discretionary spending. Octel's banking syndicate Syndicate organized crime unit throughout major cities of the United States. [Am. Hist.: NCE, 2018] See : Gangsterism has agreed to this money being available one month earlier than usual and Octel commenced its 1999 stock buy back program on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , October 15. To date the Company has purchased 89,400 units of stock at an average price of $12.48. On September 6, 1999 the Federal Trade Commission (FTC FTC See Federal Trade Commission (FTC). ) approved the acquisition by The Associated Octel Co. Ltd. (AOC AOC, n an acronym for the Aromatherapy Organizations Council. ) of the UK company OBOAdler Co. Ltd. (OBOA OBOA Ontario Building Officials Association ). The approval is subject to a 60 day public comment period and at the expiry of this period AOC's agreement to purchase OBOA becomes unconditional HEIR, UNCONDITIONAL. A term used in the civil law, adopted by the Civil Code of Louisiana. Unconditional heirs are those who inherit without any reservation, or without making an inventory, whether their acceptance be express or tacit. Civ. Code of Lo. art. 878. UNCONDITIONAL. , with completion following shortly thereafter. OBOA owns the shares and assets of the Alcor group of companies, which manufactures and markets TEL. Alcor is headquartered in Baar, Switzerland Baar is a municipality in the canton of Zug in Switzerland. and includes a TEL manufacturing plant in Doeberitz, Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). . The price to be paid for OBOA will be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $100 million and the acquisition will be funded by additional senior debt on similar terms to Octel's current debt. Further details of this transaction will be issued in Form 8K. Commenting on the Company's performance, Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the Kerrison, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Octel Corp. said: - "Another good quarter's performance, with results being very much in line with expectations. TEL prices are now 3 percent ahead of 1998 levels, reversing a two-year trend. While we are on track to meet expectations for 1999, we continue to see low cost product from Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). coming into the market. Further, the rate of decline of the TEL market forecast for 2000-2003 may be steeper than previously forecast. We are currently reassessing the situation. To offset this, we are moving into the next stage of our strategic cost management program and additional costs will be taken out of the system over the next nine months." "The expected acquisition of OBOA in the fourth quarter 1999 should allow us to better manage manufacturing, logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. and distribution challenges going forward." "I continue to be very pleased with the significant performance improvement in our Specialty Chemicals business. It is on track to make at least a 5 percent return on sales Return on sales A measurement of operational efficiency equalingnet pre-tax profits divided by net sales expressed as a percentage. return on sales The portion of each dollar of sales that a firm is able to turn into income. in 1999 with indications of future profitable growth." Octel Corp. was spun off from Great Lakes Chemical Corporation Great Lakes Chemical Corporation is a chemical research, production, sales and distribution company that produces specialty chemicals used for polymers, fire suppressants and retardants, pool and spa water purification systems and various other applications. on May 22, 1998 and entered into a marketing agreement with Ethyl, effective October 1, 1998, to include a significant part of Ethyl's TEL sales in Octel's accounts. Due to these events, the results of the nine months ended September 30, 1999 are not comparable with the corresponding period last year. Certain of the statements made herein constitute forward looking statements that involve risks and uncertainties, including the risks associated with business plans, the effects of changing economic and competitive conditions and government regulations. Additional information may be obtained by reviewing the Company's reports filed from time to time with the SEC. -0-
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------------------
1999 1998 1999 1998
(millions of dollars except per share data)
Net sales $ 126.9 $ 113.4 $ 384.7 $ 352.2
Cost of goods sold 79.0 62.6 238.2 186.2
-------- -------- -------- --------
Gross profit 47.9 50.8 146.5 166.0
Operating expenses
Selling, general and
admin. 9.3 10.1 33.4 27.9
Research and
development 1.0 1.3 3.0 2.9
Amortization of
intangible
assets 11.5 11.4 34.4 30.2
-------- -------- -------- --------
21.8 22.8 70.8 61.0
-------- -------- -------- --------
Operating income 26.1 28.0 75.7 105.0
Interest expense 5.7 8.0 19.0 17.7
Other expenses/(income) 3.3 2.9 (0.3) 4.1
Interest income (0.7) (0.7) (2.5) (2.0)
-------- -------- -------- --------
Income before income
taxes and
minority interest 17.8 17.8 59.5 85.2
Minority interest (0.7) - (0.9) -
-------- -------- -------- --------
Income before
income taxes 17.1 17.8 58.6 85.2
Income taxes 4.9 7.2 24.2 32.4
-------- -------- -------- --------
Net income $ 12.2 $ 10.6 $ 34.4 $ 52.8
-------- -------- -------- --------
Basic earnings
per share: $ 0.88 $ 0.73 $ 2.48 $ 3.59
-------- -------- -------- --------
Basic weighted average
shares outstanding
(in thousands) 13,863 14,538 13,895 14,688
-------- -------- -------- --------
ANALYSIS OF BUSINESS UNIT RESULTS
1999 1998 1999 1998
(millions of dollars)
Net sales
TEL $ 98.0 $ 94.5 $ 297.5 $ 292.7
Specialty Chemicals 28.9 18.9 87.2 59.5
-------- -------- -------- --------
Total 126.9 113.4 384.7 352.2
-------- -------- -------- --------
Gross Profit
TEL 39.2 46.8 121.3 152.1
Specialty Chemicals 8.7 4.0 25.2 13.9
-------- -------- -------- --------
Total 47.9 50.8 146.5 166.0
-------- -------- -------- --------
Operating income/(loss)
TEL 23.3 29.3 71.0 106.8
Specialty Chemicals 2.8 (1.3) 4.7 (1.8)
-------- -------- -------- --------
Total $ 26.1 $ 28.0 $ 75.7 $ 105.0
-------- -------- -------- --------
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30 December 31
1999 1998
(Unaudited)
--------------- ---------------
Assets (millions of dollars)
Current assets
Cash and cash equivalents $ 25.8 $ 26.5
Accounts receivable, less
allowance
of $2.1
(1998 - $0.8) 153.7 120.6
Inventories
Finished products 39.8 61.1
Raw materials and
work in progress 22.9 27.8
--------- ------
Total inventories 62.7 88.9
Prepaid expenses 5.1 4.9
-------- ------
Total current assets 247.3 240.9
Property, plant and equipment 148.1 147.0
Less accumulated
depreciation 41.2 30.9
-------- ------
Net property,
plant and equipment 106.9 116.1
Goodwill 332.1 360.5
Prepaid pension cost 73.4 73.5
Deferred financing costs 12.0 15.7
Other assets 10.4 -
======== ======
$ 782.1 $806.7
======== ======
Liabilities and
Stockholders' Equity
Current liabilities
Accounts payable $ 91.3 $ 78.6
Accrued expenses 15.7 13.0
Accrued income taxes 39.2 42.6
Current portion of
long-term debt 60.0 71.0
-------- ------
Total current liabilities 206.2 205.2
Plant closure provisions 30.9 47.1
Deferred income taxes 23.7 21.6
Long-term debt 194.1 229.8
Other liabilities 1.4 1.9
Minority interest 1.4 -
Stockholders' equity
Common stock, $0.01
par value 0.1 0.1
Additional paid-in capital 276.1 276.1
Treasury stock (14.2) (13.2)
Retained earnings 74.3 39.9
Accumulated other
comprehensive income (11.9) (1.8)
------ --------
Total stockholders' equity 324.4 301.1
======== ======
$ 782.1 $ 806.7
======== ======
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30
1999 1998
(millions of dollars)
Cash Flows from Operating Activities
Net income $ 34.4 $ 52.8
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization 48.3 42.3
Deferred income taxes 2.0 -
Changes in operating assets
and liabilities:
Accounts receivable and
prepaid expenses (34.0) 60.3
Inventories 24.9 9.2
Accounts payable and accrued
expenses 16.0 (4.0)
Income taxes and other current
liabilities (4.2) 31.7
Other non-current assets
and liabilities (15.2) (7.2)
---------- ----------
Net cash provided by
operating activities 72.2 185.1
Cash Flows from Investing Activities
Capital expenditures (6.9) (14.3)
Other (13.9) (7.3)
---------- ----------
Net cash used in investing activities (20.8) (21.6)
Cash Flows from Financing Activities
Net cash paid to GLCC - (468.5)
Receipt of long-term borrowings 16.0 430.0
Repayment of long-term borrowings (62.7) (91.6)
Fees related to spin financing - (11.0)
Repurchase of common stock (1.0) (9.2)
Minority interest 1.4 -
Other 2.9
---------- ----------
Net cash used in financing activities (46.3) (147.4)
Effect of exchange rate changes on cash (5.8) 3.8
---------- ----------
Net change in cash and cash equivalents (0.7) 19.9
Cash and cash equivalents at beginning of 26.5 29.7
period
========== ==========
Cash and cash equivalents at end of period $ 25.8 $ 49.6
========== ==========
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